Individual Tax Reform Is Not Lack Of Knowledge But Lack Of Action.

During the two sessions, Huang Qifan, the newly appointed deputy director of the finance and Economic Commission of the National People's Congress, suggested that the maximum marginal tax rate of personal income tax be reduced from 45% to 25%, triggering a heated debate on the reform of individual tax.

The Minister of Finance said, "the general idea of individual tax reform is to proceed from the reality of China and implement the combination of integration and classification.

The plan is designed and implemented step by step, and the personal income tax system suitable for China's national conditions is gradually established.

So how much progress will be made in this year's tax reform? Let's review the history first.

In 2003, the Financial Science Research Institute of the Ministry of Finance published the topic "the income distribution status of our residents and the fiscal and tax adjustment policy", and recommended the implementation of the reform of the personal income tax system.

During the period, the relevant government departments also mentioned the schedule of individual tax reform, for example, in the third Plenary Session of the 16th CPC Central Committee, the reform direction of "comprehensive and classified combination" of personal income tax system was established. In 2006, this reform direction was also written into the "11th Five-Year" plan.

On December 29, 2007, the thirty-first session of the ten NPC Standing Committee voted on the decision to amend the personal income tax law.

The threshold of personal income tax has increased from 1600 yuan to 2000 yuan since March 1, 2008.

On June 30, 2011, the Standing Committee of the National People's Congress voted to adopt the decision to amend the personal income tax law, raising the tax threshold from 2000 yuan to 3500 yuan.

According to the starting point of 3500 yuan, the current taxpayer data is only 28 million, accounting for only a little more than 2% of the Chinese population, and the majority of the recipients are wage earners.

As director Huang Qifan said, many business owners have a very low salary in order to avoid tax.

Thus, in the past 14 years, although the "personal income tax law" has been revised many times, the tax reform has been dragged out in the schedule of tax reform in China except for the increase of the tax threshold.

Although the slogan "combination of classification and classification" has been put forward for 14 years, it has not yet landed.

If we could then cope with the widening of the income gap between residents through the tax reform, the problem of excessive income gap would not be so severe now.

If we still do not implement the tax reform now, what bigger problems will we face in the future?

The starting point of personal tax was adjusted from the initial 800 yuan to 1600 yuan, 2000 yuan and 3500 yuan after that.

This is only the way to raise the threshold, regardless of the adjustment to the middle and low income groups.

To narrow the gap between the rich and the poor, the effect is all the same.

For example, in 2016, the personal tax revenue was 10089 billion, accounting for only 7.7% of the total tax revenue.

What is the contribution of historical personal tax to the general public budgetary revenue? Let us briefly review: in 2003, the total income of personal income tax in China was 141 billion 800 million yuan, accounting for 1.4% of the total tax revenue from 6.5% in 1994 to 6.6% in 2010 and 6.9% in 2015.

In 2016, the proportion of personal tax rose to 7.7%, mainly driven by active secondary housing pactions, and property pfer income tax increased by 30.7%.

Even so, the proportion of personal tax in the total tax revenue has increased by only 1.2 percentage points in the past 13 years, while the proportion of all kinds of income of the high income group in the total income of the residents has increased significantly.

Visible at present

The way of collection does not play an effective role in improving the income structure of residents.

In contrast, many western developed countries' personal income tax is their first largest tax.

I have checked that in 2007, the proportion of personal income tax revenue in the United States, Germany and Japan accounted for 38.1%, 25.1% and 19.6%, respectively, which were much higher than those in China. It is obvious that only effective Taxation on the rich can narrow the gap between the rich and the poor.

Recently, the Hurun Research Institute has released the "2017 Hurun global rich list". There are 609 US $1 billion billionaires in the Greater China region and second years ahead of the US.

The total number of Chinese 1 billion dollars is 652, accounting for 29%, which is higher than that of the Chinese population (20%).

China's per capita GDP is only more than 8000 US dollars, ranking the 70 among the world's countries. But the number of rich people who are worth more than 1 billion dollars is actually more than 7 times that of GDP per capita, which shows the gap between the rich and the poor in China.

The widening gap between the rich and the poor has not only caused social disharmony, but also led to sluggish consumption and economic deceleration.

Today, the National Bureau of statistics published CPI and PPI in February, the former is only 0.8% and the latter is up to 7.8%; the former is the civilian index, the latter is the middle and upper reaches of the entrepreneur index, the middle and upper reaches of the upstream products are not smooth, which indicates that the growth of the residents' income is slow, and eventually leads to the excess capacity in the middle and upper reaches; the price of high grade liquor and the price of pork have fallen, which also indicates that the gap between the rich and the poor has not been further improved, which makes the economic structure more distorted and the investment efficiency is further down.

Internationally accepted

There are three types of Taxation: the comprehensive income tax system, the two yuan income tax system and the classified income tax system.

The comprehensive income tax system is the most widely used mode of personal income tax in western developed countries. It is a tax collection system based on the progressive tax rate after collecting the net income derived from various channels in a tax year, and fully embodies the principle of fairness in taxation.

The two yuan income tax system is a lower percentage tax on capital gains, and a progressive tax rate system for labor income.

The taxable income tax system is classified according to different properties, and is taxed according to different tax base and tax rate respectively.

Our country adopts the taxable income tax system, divides the income into 11 categories, adopts different tax collection methods and different tax rates.

The direction of China's personal tax reform has long been clear, from the classification tax to the classification and integration of the mixed tax mode reform, from the individual to the object of Taxation to the combination of individual and family as the object of tax reform.

The purpose of the tax reform is to make the tax system more reasonable and fair, and to play a role in narrowing the income gap.

For example, the comprehensive tax can better reflect the principle of fairness. If we can maintain the existing taxable tax system under the condition of individual taxable units, we should take the family as a taxable unit and implement a comprehensive tax as a supplementary tax, which will not have a disruptive impact on the existing tax system and taxation, but also create conditions for the gradual pition to the comprehensive tax in the future.

On the specific operation, the comprehensive tax can be regarded as a supplementary tax of taxable tax, which can be added and refunded.

If the starting point of the national tax and salary (taxable tax) is raised to 5000 yuan, the local tax rate can be used as the starting point of the comprehensive tax for the per capita pre tax income of the family.

The starting point of Family Tax in different areas can be different. For example, Shanghai can stipulate that 5000 yuan per capita income per month before the payment of social security is the starting point. If a four person family has only one person to work, and its monthly salary is 15000 yuan, the monthly household pre tax income is 16000 yuan per person, and the average income is 4000 yuan, which is lower than the threshold.

For example, another three family has two people working for a monthly salary of 10000 yuan. Although the taxable tax has been classified separately, the family income before tax is 20000 yuan, so the family will be subject to a comprehensive tax.

The design of comprehensive tax has three advantages: one is to encourage two children; two is to consider the per capita income level of the family, which is more conducive to equity; and the three is to take the comprehensive tax as a supplementary tax, which can play a role of "robbing the rich and helping the poor" to a large extent.

Although the progressive tax rate of our highest salary reaches 45%, and the grade reaches 7 level, it is higher than most countries in the United States, Japan and the whole world, but the actual taxation effect is not good (see table below).

This is because our current classification and collection mode not only provides a loophole for taxpayers to avoid tax, but also leads taxpayers to evade paying taxes through various tax avoidance means because of the high cost of normal tax payment.

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